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Minister of Indigenous Services Jane Philpott and National Chief of the Assembly of First Nations Perry Bellegarde listen to a delegate's question at the Assembly of First Nations Special Chiefs Assembly in Ottawa, on Dec. 6, 2017.

Justin Tang/The Globe and Mail

First Nations with good financial track records will no longer be required to account to Ottawa for every dollar of federal money they spend on things such as health-care, education and social services under a new program being proposed by the Trudeau government.

The plan to guarantee long-term funding with a minimum of bureaucratic oversight for 100 First Nations communities by April, 2019 is the first concrete step in what Jane Philpott, the Minister of Indigenous Services, says will be a new fiscal relationship with Canada's Indigenous people.

It is also a significant shift from the policies of former Conservative prime minister Stephen Harper who raised the ire of chiefs by passing legislation that required First Nations to submit their audited consolidated financial statements and information about salaries and expenses to the government for posting on the Indigenous Affairs website. The Liberal government stopped enforcing that law shortly after taking power in 2015.

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Two years later, Dr. Philpott is preparing to give First Nations with a history of good financial management 10-year grants that would provide a single stream of predictable federal funding and allow band councils to spend that money as they see fit. Rather than report back to federal bureaucrats, First Nations leadership would be accountable to their own members. Exact mechanisms for that accountability have yet to be determined and they may largely be left up to First Nations themselves.

"It's a big deal, this change or the possibility of change," Dr. Philpott said in a telephone interview. "Once the money goes to those communities, then they have complete flexibility."

The 10-year grants were among the recommendations of a 17-month study by the Assembly of First Nations and bureaucrats within Indigenous Services. The details of how they would work are still being negotiated with the AFN and financial institutions including the First Nations Financial Management Board, which helps First Nations develop their financial administration and accredits those that adhere to good practices.

As it stands, the average First Nation must submit more than 130 reports to Ottawa every year to qualify for funding from multiple departments including Indigenous Services, Health Canada, Justice, Public Safety and Employment, and Social Development Canada.

Under the new program, said Dr. Philpott, the government would work out how much a community would reasonably expect to receive from all federal sources over the coming decade and then transfer the cash, probably in instalments, over the 10-year period.

"The idea is that it would be a move from an overly burdensome reporting mechanism that would come back to the federal government," she said, to a "mutual accountability framework, from a range that we would agree on in advance, in terms of what kind of reporting the nations would do for their citizens."

That reporting could mean that First Nations are required to set sustainable-development goals, such as how many students graduate from high school, and then prove to their own members that they have achieved them, she said.

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Dr. Philpott points to the success of a pilot project in which a five-year funding agreement negotiated in 1987 with the Miawpukek First Nation in Newfoundland was followed by 10-year agreements and, in the process, the First Nation has transitioned from a poor, isolated community into one that manages its own lands and resources and where there is employment for all members.

First Nations that have long-term funding are "empowered to deliver and we have proof that it works," Dr. Philpott said.

Cathy McLeod, a British Columbia MP who is the Indigenous affairs critic for the Conservatives, said she is concerned that the proposal for the 10-year grants is being negotiated behind closed doors between the government and the AFN.

The transparency act that was brought in by the Harper government asked only that basic information be made public, she said. Although many chiefs were upset by it, Ms. McLeod says she regularly gets calls from members of First Nations who are frustrated by the lack of financial information they can obtain from their band council.

The government has "missed the important step of talking to community members," said Ms. McLeod. "They are having secret tables with the chiefs but they are not talking to the people that want to hold their leadership to account and I think that is a big gap."

But Perry Bellegarde, AFN National Chief, said the new long-term funding model being proposed by Dr. Philpott is the natural next step on the road to a new fiscal relationship.

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"Right now it's year to year, you can't do any long-range strategic planning. And a lot of the current programs are underfunded," said Mr. Bellegarde, who prefers to use the word transfers instead of grants because the funding for First Nations would mirror the transfers that Ottawa gives provinces and territories for health and social services.

The money would have to be based on a First Nations' total membership, said Mr. Bellegarde, and they would have to be indexed to keep up with inflation. But moving away from regular reporting to the government does not mean First Nations do not want to be accountable, he said.

First Nations agree that accountability and transparency are fundamental, even if they don't explain all details of their spending to Ottawa, Mr. Bellegarde said. "We've always said chiefs are accountable first and foremost to their citizens."

Editor’s note: A Thursday news story on First Nations funding referred to the First Nations Financial Transparency Act. The Liberal government stopped enforcing the Act when it took power in 2015, but that Act has not been repealed as reported on Thursday.
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